Ramssol targets recurring revenue through its Pay Day Now early wage access platform

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Ramssol targets recurring revenue

Highlights

Ramssol charges RM5 for each Pay Day Now transaction, targeting recurring revenue with a future joint transaction target of RM2 billion per month with Ambank.
The partnership with CTOS Data System since 28 July enables CTOS to act as a reseller, earning a RM1 commission per transaction, while Ramssol receives the remaining RM4.
To date, 560 employers covering approximately 190,040 employees have used the platform, with expansion focused on major retailers and a transfer of listing to the Main Market of Bursa Malaysia next year.

This article was translated from the original. Read the original version by our correspondent here.

Scaling strategy and revenue model

The Edge Malaysia reported that the ACE Market-listed human resource management solutions company charges RM5 each time an employee makes a withdrawal through its earned wage access, or EWA, facility known as Pay Day Now, developed together with Ambank Group. Ramssol group managing director and chief executive officer Datuk Cllement Tan Chee Seng said the platform has the potential to become an important source of recurring revenue as its user base grows larger.

According to him, the model depends on high transaction volumes, with a joint target with Ambank to disburse RM2 billion per month in the future. However, he stressed that investors should not expect an immediate jump in profits, as the process of onboarding more employers and employees onto the platform takes time.

Ramssol is targeting convenience store chains and major retailers, as their large workforces can accelerate scaling efforts. Tan said the response so far has been encouraging, but the biggest challenge remains the initial step of getting employers to join the platform.

In addition to requiring participating employers and employees to have Ambank accounts, clients' human resources teams must also provide sufficient employee information and screening documents. These requirements can be more complex for companies with thousands of staff nationwide, as coordinating bank account openings requires significant operational effort.

CTOS partnership and the group's growth positioning

To expand its market reach, Ramssol brought in CTOS Data System Sdn Bhd, a unit of CTOS Digital Bhd, under an agreement that took effect on 28 July. CTOS introduces and promotes Pay Day Now to employers in its network, while Ramssol manages the client onboarding process and platform operations.

Under the arrangement, CTOS acts as a reseller and screening provider, earning a RM1 commission for each withdrawal. This leaves Ramssol with the remaining RM4 of the RM5 transaction fee, and at the time the original article was written, the company had onboarded 560 employers covering approximately 190,040 employees.

Since its listing in July 2021, Ramssol has spent more than RM21.7 million to acquire majority stakes in companies primarily involved in digital marketing, software development and recruitment services. Tan said the new entities complement Ramssol's existing business by enabling the group to help clients recruit employees, manage payroll and provide workforce administration systems, thereby broadening its client base, which had previously been more concentrated among large companies and multinationals.

Tan also believes that the current market valuation does not fully reflect Ramssol's growth prospects. He maintains the long-term ambition of seeing the company reach a RM1 billion market capitalisation, while the immediate focus remains on developing Pay Day Now and plans to transfer its listing from the ACE Market to the Main Market of Bursa Malaysia next year.

In our previous article on the CTOS Digital cybersecurity incident, we examined how service disruptions and market concerns triggered analyst downgrades and pressure on the share price. We also discussed the company's estimated financial impact, including the possibility of lower profits and revenue if some services remain disrupted for longer, as well as additional risks to customer confidence and retention.

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